Breaking Down the Walls
By Craig Cochran

Although it saves money and promotes flexibility, process orientation means losing those cherished, autonomous departments.

For most organizations, process orientation offers one of the biggest improvement opportunities available. It also represents a huge change in the way most organizations view and manage themselves. With process orientation, organizations think in terms of integrated processes rather than a confederation of functional departments. Although there's nothing inherently wrong with managing by departments, problems arise when they're managed semi-autonomously. In such cases, each department manager attempts to maximize his or her results without considering how the results affect the remaining portions of the process. In addition, departmental divisions cause countless problems related to communication, coordination and resources. As a result, the organization's performance suffers because its operations aren't structured optimally.

What's in a process?
Before we go further, let's clarify what the term "process" means. Very simply, a process is an activity, or bundle of activities, that takes inputs and transforms them into products or output. Under this extremely broad definition, just about any activity could qualify as a process. However, we'll concern ourselves strictly with major business processes -- the handful of primary transformation activities within an organization. Even the most complex organization probably has fewer than 20 major business processes. These work together in an integrated manner to carry out the organization's strategy and achieve its mission.

Managing a business in terms of business processes makes perfect sense, you might be thinking. Why would an organization manage itself any other way? The answer is that most organizations are structured according to functional activities rather than processes. For example, people who perform similar activities and report to the same manager are grouped together. Once they finish their work, the product is handed off to the next functional department and forgotten.

For example, consider the manufacture of widgets. The three key activities in widget manufacturing are stamping, grinding and polishing. A traditional widget manufacturer divides these activities into individual departments, each with its own manager, staff, equipment and supplies, as illustrated below.

From one perspective, organizing the company like this makes a lot of sense. The work is cleanly divided into discreet activities, with specialists doing their jobs and only their jobs. Measuring the output of individual activities is easy. At the beginning of the 20th century, Frederick Taylor and Henry Ford used this approach to achieve new levels of productivity from, and control over, employees. With cleanly divided departments, employees are focused on their own work and little else.

Ironically, this focus is also one of the drawbacks of the approach. Everyone concentrates exclusively on his or her job and really doesn't understand how the work contributes to the organization's greater goal. Departments try to excel individually without regard to the organization's overall excellence. Each department measures its output and its efficiency, doing whatever it can to improve this performance. Such a structure works fairly well when an organization makes a large quantity of a few products and it can sell everything it makes. The structure causes problems, however, when the product list expands and mass customization becomes critical. Of course, a wide product list and mass customization are virtually the norm now, for manufacturer and service providers alike.

Another drawback to the departmental approach is that resources aren't easily shared across departments. Personnel are trained to do jobs in their departments only; they can't be redirected to activities in other departments because they don't know anything about those activities. Even if they did, what would be the advantage to the department manager, who's measured on the output of his or her department? The departmentally structured organization lacks the flexibility to apply people where they're needed on a moment's notice.

Personnel aren't the only resources that get snagged on departmental boundaries. Supplies and materials don't flow easily across these divisions either. When supplies and materials are allocated to individual departments, there's little motivation to share resources when other departments need them. At the very least, delays occur as the details are worked out and managers determine how they can benefit from the situation. The question, "What do you have that I can use?" is often heard in such situations. Because most managers are compensated based on their department's performance, they can't be blamed for behaving logically.

The last important resource that has trouble passing through departmental boundaries is information. The departmental structure sets up a filter between information and the people who need to receive it. Feedback about the conformance of work between departments is delayed or blocked altogether. In many organizations, it's forbidden for personnel to leave their departments and interact with people from other departments. Even without such explicit prohibitions, though, departmental divisions pose an obstacle to personnel receiving feedback on their work further down the line. This block reinforces the tendency for departments to think of themselves as little islands, operating independently of other activities.

Orienting to the big picture
Consider how the illustration below differs from the one we've been discussing.

The functional activities of stamping, grinding and polishing are recognized as part of an overall process. No departmental boundaries exist between these activities. Personnel are cross-trained on different jobs so they can move from one activity to the next, based on the workload. Flexibility is built right into the structure. Because departmental boundaries don't exist, resources also flow smoothly from activity to activity. Information, supplies and materials all go where they're needed, when they're needed. One person manages the entire process and is compensated based on the process's overall performance, rather than just one aspect of it.

An organizational structure based on major processes makes perfect sense, but it's a radical departure for many enterprises. Most managers have come of age in a world where companies consisted of functional departments, not integrated processes. Understanding how processes function requires a different mindset than understanding how departments function.

The missing element here is the link between one activity and the next. In functional departments, links are taken for granted. If each department does its part, then the entire organization will succeed. Little consideration is given to the links between the departments, even though most problems occur there.

Process orientation highlights the links between activities because the links have become a visible part of the process. They aren't disguised by departmental boundaries. With true process orientation, if the links aren't effective, it becomes immediately apparent. The connections between activities become smoother because the process's dynamic nature demands that they continually improve.

Clear processes also encourage organizations to use teams in the workplace. Supervision is important when people must be pushed and directed, which happens when nobody really understands how the overall process works. In an organization that has adopted process orientation, everybody can clearly see how the various activities fit together and support one another. The relationships are obvious. People can see and understand the results of their efforts, and supervision becomes less necessary. Process orientation therefore promotes self-directed work teams and team problem-solving.

In almost every way, process orientation is superior to traditional departmental structure. Consider the following comparison between a functional department and an integrated process:

With a functional department, you'll find:

• Specialization

• Improvement efforts focused on the activity level

• Each activity fully staffed

• All personnel and equipment utilized

• Little understanding of interdependencies between activities and processes

• Close supervision

• Localized communication

• Slow feedback from downstream activities

• Metrics focused on the activity

• Narrow accountability

• Little flexibility in the event of changes

• Competition for resources

• An inward-looking view

• Clean divisions between management and staff

An integrated process, however, promotes:

• Broad competencies

• Improvement efforts focused on the process level

• Activities only staffed as necessary

• Personnel and equipment used when demand requires them

• Heightened understanding of interdependencies between activities and processes

• Less need for supervision

• Free-flowing companywide communications

• Fast feedback from downstream activities

• Metrics focused on the overall process

• Broad accountability

• Flexibility when change occurs

• Shared resources

• An outward-looking view

• Blurred divisions between management and staff

Typical business processes
Many sub processes support one major business process, but they all have the same ultimate objective: enabling the business process to fulfill its organizational objective. Major business processes sometimes coincide with traditional departmental boundaries but more often cut across them.

People often become confused about where to draw the lines between major processes. It's worth vigorous discussion but not worth getting too hung up on. The exact definition of each business process could easily be argued from a number of different angles. It's important to remember that, with process orientation, the organization is broadening its focus and attempting to embrace a new structure. This alone is a huge breakthrough.

Let's look at some examples of major business processes and the sub processes that support them.

Drawing the lines between business processes is something of a balancing act. Generally, an organization benefits when the business process cuts as broadly as possible through the organization: however, a process that cuts too broadly will be difficult to control. Defining the end of one business process and the start of another is a matter of subjective judgment and what can only be called "process wisdom." Nevertheless, a couple of guidelines can assist in defining the processes.

First, business process includes activities that add value to a product in the same general manner (e.g., by acquiring and readying the product, transforming the product, etc.). The activities don't necessarily need to be similar to one another, but they must work toward a common destination.

Second, business process includes activities that have the same general objective (e.g., acquiring the best supplies and materials at a competitive cost, transforming the product in the most efficient manner possible, etc.).

Avoid the temptation to define processes along the same boundaries as functional departments. The whole point of process orientation is to combat the narrow, myopic perspectives that functional departments often encourage. Simply calling a functional department by a different name does nothing for the organization.

Beginning the journey
In a perfect world, restructuring an organization along business processes would be a simple action. Nobody resides in a perfect world, however. Organizational changes of this magnitude carry with them significant implications, and usually only the most senior managers can successfully carry them out. Even then, they sometimes fail.

Evolving toward process orientation is the best solution. Practical actions can be implemented that will gradually shift your organization toward process orientation. And these can be implemented by anyone with organizational respect and clout. The cumulative impact of the following actions is great, but taken slowly and incrementally, they're much easier to digest:

Craig Cochran	About the Author: Craig Cochran is a project manager with the Center for International Standards & Quality, part of Georgia Tech's Economic Development Institute. He's an RAB-certified QMS lead auditor and the author of Customer Satisfaction: Tools, Techniques and Formulas for Success and The Continual Improvement Process: From Strategy to the Bottom Line, both available from Paton Press. CISQ can be reached at (800) 859-0968 or on the Web at www.cisq.gatech.edu.
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